Understanding Analyzed Business Checking Accounts

Analyzed business checking accounts are a type of account that uses deposit balances to generate a credit to reduce or eliminate transactional costs and service charges that are charged to a business checking account. These type of accounts can often save a business money if they have a high transaction volume and maintain a moderate to high balance.

For analyzed checking accounts, typically a bank will charge a fee for each transaction that the bank processes. Examples of a transaction would include checks paid, deposits made, number of checks in a deposit, wire transfers and ACH (Automated Clearing House) debits and credits. Other costs that could be charged to an account could include cash management services, checks purchased, stop payments or other services that the customer uses at the bank.

With this type of account the bank will then apply a credit against these costs based on the balances that the customer keeps with the bank. This credit is calculated by multiplying the average investable balance in the account times an earnings credit rate (ECR). The average investable balance is the average collected balance less a legal reserve balance that the bank is required to keep with the Federal Reserve Bank and therefore cannot be invested by the bank. The ECR is calculated by banks and set monthly based on current marketing conditions.

A business may combine multiple accounts together resulting in the ECR being applied to a combination of all investable balances that the business has with their bank. In this case the earnings credit is applied against the total of all service charges from all combined accounts. Monthly a business can receive a detailed statement showing all of their account transactions and the calculation of the ECR credit to offset their total monthly service charges.

To determine if an Analyzed Business Checking account is the best account for your business, a meeting with a business banker is recommended to determine if this type of account is your best alternative. To learn about Pioneer’s Analyzed Business Checking account, click here.